Lawmakers “Speechless” At Hearing Over Contracts

^{Editor's note: This story has been updated throughout.}

A pair of taxpayer-funded contracts meant to upgrade the state’s antiquated child support enforcement system are behind schedule and at least $50 million over budget, and on Thursday the Texas House’s chief budget writers wanted to know why.

At a meeting of the House Appropriations Committee, the lawmakers grilled state officials and the tech companies, wondering aloud whom they should hold accountable for the contract failures and questioning why part of that money was paid to workers in India.

Committee's chairman Rep. John Otto, R-Dayton, invited testimony about the two contracts at Texas Attorney General Ken Paxton's office, vowing to “take up this matter again” as more information is turned up about what went wrong.

The first contract was awarded in 2007 — under former attorney general, now Gov. Greg Abbott — to consulting firm Deloitte for a “roadmap” of the attorney general’s business processes to prepare for new child support enforcement technology.

The work was supposed to cost $1.8 million, but the contract was renewed five times for a total cost of $46 million. Still, the finished product “wasn’t worth the paper it was written on,” according to testimony from Herbert Krasner, a technology expert from the University of Texas at Austin who evaluated the contract for the federal government.

“I am kind of speechless,” said state Rep. Helen Giddings, D-DeSoto.

Representatives from Deloitte were not invited to testify, Otto said, because he did not realize the hearing would involve them, but a spokeswoman for the company took issue with Krasner's remarks.

"Deloitte has been deeply committed to the state of Texas for over 40 years, and flatly rejects the mischaracterization of our work for the Office of Attorney General," spokeswoman Courtney Flaherty said in a prepared statement. "We stand fully behind the quality of this work, which was completed over three years ago and validated and accepted by both OAG and the vendor responsible for delivering the T2 child support system."

The federal government, which shares responsibility with the state for collecting child support payments, is paying 67 percent of the project’s costs. Federal officials froze further payments to Texas on Nov. 30.

The second contract was awarded to Accenture in 2010 to design and build the technology based on Deloitte’s specifications, said Ursula Parks, director of the Legislative Budget Board.

In total, the project's costs have already swollen to $310 million —  $87 million more than originally pitched. State officials laid the blame on changes in project requirements and design, increased costs for data center requirements such as servers and budget cuts that affected the project in 2012 and 2013.

Paxton's office said Thursday it will continue working with Accenture on the project, despite $50 million more in projected possible cost overruns, because that would be cheaper than starting from scratch with another contractor.

Krasner said he raised issues with the attorney general’s office about the two contracts as early as 2011, but media reports about the contracts’ value began surfacing in recent months. At the hearing, lawmakers asked questions — without naming names — about who should bear the blame for the companies’ failure to deliver results on time and within their budget.

“Where was that authority? Who were the complaints raised with? And why were decisions not made that got this thing back on track?” asked state Rep. Donna Howard, D-Austin.

Parks said she did not know which specific employees at the attorney general’s office had been notified about the issues, but she said the budget board could “get the documents.”

“I would say, whatever efforts took place to get this back on track, we are still in a place where there are not final deliverables and the final due date has been pushed out a year,” Parks said.

Lawmakers also questioned why Accenture outsourced some of the contract work to its overseas operation in India. Accenture confirmed Thursday that more than 160 programmers in India had worked on the project.

Parks said she did not know whether it was common for state contract work to be outsourced overseas but that her agency was researching it. 

Accenture representatives Steven Grotto and Ben Foster disputed that the move could be considered outsourcing because the programmers in India were the company’s employees. They said those programmers had been assigned to work on the project for their expertise, not for cost reasons.

They said the contract had caused Accenture to swallow significant costs, though they did not specify how much.

“We thought we could work through the issues of that [Deloitte] playbook, and for five years, frankly, we’ve experienced significant harm, financially, and we’ve experienced significant problems getting deliverables done,” Grotto said.

Otto said the committee would likely call another hearing to discuss the contracts in the spring.

Disclosure: The University of Texas at Austin is a corporate sponsor of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.